Valuation and Transaction Servicesgracelui@nexiats.com.sg
Valuation and Transaction Serviceskarenlau@nexiats.com.sg
Teo Seah Yung
Valuation and Transaction Servicesteoseahyung@nexiats.com.sg
Since the emergence of Covid-19 pandemic last February 2020, livelihood and businesses across the globe have been badly affected due to massive lockdowns, border closures and supply chain disruptions. After more than a year, economies are gradually adapting to the new normal as vaccines are made available in most countries to curb the spread of the Covid-19 virus and that has boosted the confidence of the investors. With the current new normal environment we are in, the Asia Pacific markets are gaining back M&A activities and seeing more transactions as evidenced by both volume and transaction size registered in late 2020 and early 2021.
During the peak of the pandemic, companies have scrambled to cut costs and salvage their existing businesses with measures put in place to contain the spread of Covid-19 and optimize resources. With businesses resuming in 3Q2020 after the ease of lockdown measures as well as awaiting for the vaccines to be distributed within Asia Pacific, various factors such as market consolidation, economies of scale, low valuations and capital raising have contributed to the improvements in both 4Q2020 and 1Q2021 for both volume and transaction size.
From 1Q2020 to 1Q2021, industrials sector which include capital goods, commercial and professional services, and transportation remains the favorite for M&A targets, followed by information technology (IT) sector in terms of transaction volume. IT sector is probably expected with the growth of digital and tech-based businesses to support telecommuting and demand for virtual activities.
China was ranked first amongst Asia Pacific countries for both M&A transaction volume and size from 1Q2010 to 1Q2021, while higher average deal size are recorded by Hong Kong, Singapore and South Korea in 1Q2021. Singapore constituted approximately 3% and 4% in both transaction volume and size respectively when compared with other countries within Asia Pacific.
With industrials being the top sector, Singapore-based global precision plastics manufacturer Sunningdale Tech Ltd. completed the acquisition of Moldworx via its wholly owned subsidiary Sunningdale Tech Inc. in Michigan on 6 November 2020 which marks Sunningdale’s first expansion into the US. Sunningdale has 18 manufacturing facilities in eight countries around the world, with a support office in Michigan.
Sunningdale builds injection molds for presses in the 10 to 1,800 tonne range, primarily for the automotive, consumer, and healthcare markets. Film insert molding, liquid silicone rubber, stack molds, multi-shot, gas-assist, and molds for thin-wall, high-speed processes are specialties.
Moldworx began as a mold design and manufacturing operation and eventually grew into molding. Today, Moldworx operates 10 injection molding presses ranging from 55 to 400 tonnes. The mold-making division builds molds primarily for components for the drug delivery/pharmaceutical market. The molding division serves a variety of markets, including consumer, agriculture, and healthcare.
Separately, a private equity firm Novo Tellus Capital Partners also invested in Sunningdale Tech in November 2020 as well as another Singapore listed company, Grand Venture Technology, by investing $23.6 million for a 23.45% stake in January 2021. Grand Venture Technology provides manufacturing services to customers in the semiconductor and analytical life sciences sectors.
IT sector also garnered high transaction volume in 1Q2021 with Sea Limited, the tech startup with mobile gaming and online shopping such as Shopee, acquiring Indonesia’s PT Bank Kesejahteraan Ekonomi. Sea has gained full control of the Jakarta-based lender, better known as Bank BKE, after buying stakes from existing shareholders PT Danadipa Artha Indonesia and PT Koin Investama Nusantara through its subsidiary. The move accelerates the company’s ambition to establish itself as a leader in financial technology and services across its region.
Our Transaction Service team has vast experience in due diligence conducted on a wide array of private and public listed businesses, both in Singapore and in the Asia region. Given the wide spectrum of industry sectors served and global expertise of our international network, our team can draw from the collective experience and knowledge garnered by our practice leaders to address industry-specific risks and opportunities. Our Transaction Service team will also work in cooperation with our tax, M&A and risk management specialists to provide an integrated service and offer guidance in the course of your transaction.
Please speak to our Transaction Service specialists for your due diligence and valuation needs.
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